CHANGE COMES TO ALL, EVEN TO BCFM

Themed “Your World, Your Connection,” the 2008 Annual Conference for the Broadcast Cable Financial Management Association and its Broadcast Cable Credit Association subsidiary lived up the promise that it would help provide a blueprint for the future of media businesses.     

This year’s conference was a great example of the breadth of wisdom and knowledge that can we can share to help companies to steer clear of obstacles as they map out their new media business plans.

Our opening keynote was delivered by Ken Lowe, president-CEO of E.W. Scripps Co., whose leadership helped create some of the most successful brands in network TV and online.

At first blush, you may not think of Lowe as an exemplar for the industry’s finance professionals. As Lowe admitted, the only math involved in his first industry job as a DJ was counting down country’s top 40.

But as anyone who has followed his career ever since would know, it’s been more about how numbers have gone up under his leadership. That’s why BCFM selected him to receive this year’s Avatar Award.

The Avatar Award was created to recognize an individual for outstanding contributions to both the media industry and to his or her community. It is a symbol of leadership and distinction that is reserved for very special individuals, leaders like Ken Lowe.

In accepting the Award, Lowe shared some insights and counsel with our Conference attendees that I wanted to pass along to you. They are great tips on what it takes to build great companies in today’s new media marketplace.

Lowe, who recently read The Black Swan by Nassim Nicholas Taleb, encouraged us to think about the black swans that have emerged around us, like Google and 9/11.

“These are events—good or bad—that are so improbable, so unlikely and so unimaginable that you can’t really plan for them before they happen. After the fact, though, they become part of our DNA and it’s difficult to remember life the way it was before,” he said.

HGTV, Scripps’ first cable network, also served as a black swan. As Lowe pointed out, nobody expected a company like Scripps to build a TV network from scratch and, more notably, that it would change the shelter media landscape.

Lowe and his colleagues at Scripps also believe that another black swan is coming that could just as easily disrupt HGTV’s success in the way it influenced the shelter magazine business.

Using Scripps as an example, he encouraged attendees to be ever mindful that change is coming and to do our best to “create a culture that encourages and empowers creative thinking and some real risk-taking.”

For Scripps, the goal is to control its destiny by creating its own black swans, he said.

In looking at the most dramatic changes that have disrupted the media industry’s status quo, the Internet stands above all others, he said.

“The Web has empowered media consumers, who today expect to watch whatever they want, when they want and where they want. It also has empowered advertisers who’ve always wanted hard proof that their marketing dollars are reaching their intended audiences.”

He believes that the opportunity for media companies is to create interactive businesses that can capitalize on both of these trends—interactivity and accountability—where they intersect. 

In Scripps’ case, its branded Web sites have evolved into comprehensive destinations for lifestyle content that attract about 15 million unique visitors every month.

For example, RecipeZaar, a company acquisition, and Food Network’s Web site account for about 25 percent of all of the Web’s traffic to food and cooking sites.

The company has also purchased FrontDoor, a national real estate listing service that allows the company to capitalize on HGTV’s brand strength and valuable video library.

Scripps expects to apply lessons from its online comparison-shopping service Shopzilla, which relies on a cost-per-click business model similar to Google’s, to better capitalize on the valuable traffic being generated by popular Web sites.

Lowe described the role that Scripps Networks, a company that didn’t exist a little over a decade ago, in the upcoming split of Scripps into two companies.

Beginning July 1, Scripps Networks Interactive will include the company’s cable networks and comparison-shopping Web sites, and The E. W. Scripps Co. will go forward operating newspapers, TV stations and a licensing and syndication business.

The company reached this point by using some of the free cash from its papers and TV stations to build its TV networks in the early to mid-1990s.

Today, Lowe stated, Scripps Networks Interactive finds itself in a similar situation. It has great, established brands that are growing at the pace of established businesses and are generating lots of free cash.

And it is competing in a media marketplace that is, as always, undergoing fundamental change. Conditions are ripe for another black swan, he notes, and the company is committed to being smart enough to be the one that creates it.

Lowe finished his remarks by identifying six qualities necessary for fostering the culture of change and innovation that can create black swans:

Intelligence—Good old-fashioned book smarts. Not necessarily an MBA or a PhD, but being well educated, formally or self-taught. As Malcolm Forbes once observed, “Education’s purpose is to replace an empty mind with an open one.”

Common sense—As the French philosopher Voltaire once wrote, “Common sense is not so common.” Sometimes life—and business—doesn’t always go by the book, and situations sometimes demand a healthy dose of common sense.

Compassion—Effective leaders have a genuine concern for others. “A good head and a good heart are always a formidable combination,” as Nelson Mandela said.

Courage—You may not have to be a leader to be courageous, but you have to be courageous to be a good leader. Churchill’s advice during the height of World War II applies to the challenges faced by the industry today: ‘Success is not final. Failure is not fatal. It’s the courage to continue that counts.”

Adaptability—In order to grow, we should be willing to try new things and address old problems in new and fresh ways. Or, as former GE CEO Jack Welch might put it, “Change before you have to.”

Integrity—Great leaders stay true to their own conviction. They have a strong sense of right and wrong and they endeavor to deal honestly in all they do. Lowe cited the great role models for integrity in his own life, including his parents, his brother, and the CEOs at Scripps who preceded him, including Bill Burleigh, who still serves as its chairman.  When Lowe became CEO of the company eight years ago, Burleigh advised him: “Do the right thing.” That pretty much says it all.

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In our own effort to keep up with the changes sweeping media, BCFM voted to change its name to the Media Financial Management Association (MFM).

The new name will become official within the next several weeks, following the filing of new articles of incorporation for the organization.

Extending our services to new media businesses is also a subtle, but significant change.

The change may be subtle for our current members, many of whom are pioneering the new media frontier. However, it is a significant one for companies that are becoming part of the media industry.

They need to learn about such issues as music licensing, day sales outstanding and cross-platform sponsorship packages. And they can learn a lot from their more seasoned industry colleagues.

In keeping with our organization’s strategic plan, we will step up our efforts to provide our educational services to the next generation of media businesses and to foster the type of information sharing that is a hallmark of our annual conference and other events.

With respect to the first quality that Lowe identified—intelligence—MFM will help our industry’s CFOs continue to develop their intelligence at our Annual CFO Summit, which will be held in Asheville, N.C., on June 18.

The summit will include a keynote from Cynthia Jamison, national director of CFO services at Tatum LLC, who will describe the expectations placed upon today’s CFOs.

We’ll follow Jamison’s remarks with a number of skills-based sessions that will help our industry’s CFO’s to meet those expectations. Details may be found on our Web site.

Intelligence. Common Sense. Compassion. Courage. Adaptability and Integrity. By developing those qualities, we can all become avatars in our companies, our communities and our industry.

As we move into the future, MFM will continue to work to provide our members with the information they need so they can embrace these qualities to create their own “black swans.”

Mary Collins is the president and CEO of the Broadcast Cable Financial Management Association (soon to be the Media Financial Management Association), a professional society for addressing the diverse needs of financial and business professionals in the broadcast, cable, and electronic media industries. Her column appears here every other Friday.